AN investigation into a scam run by a former official at a State-owned bank in Bao’an District has led to the shuttering of an underground bank network with assets of 12 billion yuan (US$1.88 billion).

    The State-owned bank was not identified in the report by the Southern Metropolis Daily yesterday, although the former bank official was identified as Shen Haisheng. Six dens were raided by Bao’an police in an operation in June, with 24 people being arrested and 30 others caught June 2, the Daily said.

    The crackdown is part of a nationwide campaign against underground banks, which was launched by the Ministry of Public Security to maintain order in the financial and capital market. The campaign will last until November.

    According to Vice Minister of Public Security Meng Qingfeng on Monday, a similar campaign launched in April to stop transfers of illicit money through offshore companies and underground banks uncovered several major cases involving more than 430 billion yuan.

    Underground banks traded foreign currency, transferred funds to overseas countries or regions, and helped launder money, threatening China’s economic and financial security, he said.

    The investigation of the Bao’an underground bank started after police officers with the economic crime investigation division of Bao’an District Public Security Subbureau probed a case filed against Shen, a former chief of the Bao’an subbranch of a State-owned bank.

    Shen was accused by a Hong Kong businessman, Chan Tat, of embezzling 6 million yuan of his assets, which Shen was helping transfer from Shenzhen to Chan’s Hong Kong bank account.

    Chan was eager to have his more than 63 million yuan transferred out of the mainland after he decided to go back to Hong Kong for retirement at age 80. He had been doing business in Shenzhen for more than two decades.

    Chan could not legally transfer all of his assets to his Hong Kong bank account in a short period of time due to the mainland’s exchange controls. Shen offered to help him in exchange for 2 million yuan, the Daily said.

    Chan transferred over 63 million yuan in three batches to a bank account under the name Li Hongju as Shen required in August 2012, but Chan’s Hong Kong bank account was short of 8 million yuan.

    Shen promised to fill the gap in three months and wrote a receipt of loans for Chan, although Shen said Li, the person who was responsible for the transfer, had disappeared.

    Chan filed a charge against Shen, who quit his job and fled in November 2012. Shen still owed Chan 6.25 million yuan.

    Cao Qinan, the deputy chief of the economic crime investigation division of Bao’an District Public Security Subbureau, said they found out that Shen used an underground bank to transfer Chan’s money.

    (Continued on P3)

    Ye’s sister said she was approached by a bank employee, with whom she had a business connection, asking her to help transfer 22 million yuan to Hong Kong, and she was told that the person in charge of the money was surnamed Shen.

    It took Ye and his sister only two hours to finish the whole transfer and they earned 50,000 yuan from it.

    As suspects were arrested, a number of personal bank accounts involved were frozen. Some of these clients said bank employees had introduced underground banks to them for lower charges and high efficiency.

    Chinese police have launched a nationwide campaign against underground banks, which will last until November, to maintain order in the financial and capital market, according to Vice Minister of Public Security Meng Qingfeng on Monday.

    A similar campaign launched in April to stop transfers of illicit money through offshore companies and underground banks uncovered several major cases involving more than 430 billion yuan, he said.

    Underground banks traded foreign currency, transferred funds to overseas countries or regions, and helped launder money, threatening China’s economic and financial security, he said.

    (Zhang Yang)